CHAPTER 4 New normal business environment
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WORLD LIQUID FUELS PRODUCTION AND CONSUMPTION BALANCE
Global oil inventories are expected to increase in 2022 and 2023, as production will outstrip consumption and therefore crude oil stocks will increase by an average of 0.5 Mb/d in 2022 and 0.6 Mb/d in 2023.
The price of Brent crude oil, the benchmark price in Europe, rose by more than 78% from January 2021, when it was at an annual low, to October 2021, when it reached a high of $84.7/Bbl. Brent averaged $70.7/Bbl in 2021, 70% above 2020.
DEMAND
After a turbulent 2020, 2021 was marked by life during the pandemic and the return to normality. The progression of vaccination campaigns led countries to relax restrictive measures, resulting in an increase in personal travel and economic activity in general, and thus in demand for oil. In this regard, OPEC forecasts a 6% increase in crude oil demand in 2021 compared to 2020, up to 96.6 Mb/d3.
OPEC also expects world oil demand to rise by 4.2Mb/d in 2022 compared to 2021. The new Omicron variant may have an impact in the first half of 2022, which will depend on the mobility decisions taken by individual countries to contain infections. The petrochemical industry is expected to continue to drive oil demand, while petrol and diesel are expected to continue to recover and reach pre-pandemic levels at some point in 2022. Regarding aviation fuel and although there has been a significant increase in private travel, commercial aviation is not expected to recover to pre-pandemic levels in 2022.
The future behaviour of demand for crude oil and petroleum products will be linked to the evolution of the pandemic and the momentum of the economy. The current geopolitical risk due to tensions between the Middle East and Eastern Europe, as illustrated by the disruption of the pipeline carrying oil from northern Iraq to Turkey and the threat of the current conflict between Ukraine and Russia, will also shape the course of the oil market.
REGULATION
Regulation is an increasingly influential factor in the oil and gas industry, mainly in developed countries, where environmental requirements and technical product specifications are becoming more and more restrictive, with the market demanding ever less polluting products.
At Cepsa we work in advance to ensure that our products meet the required specifications, and that quality and service expectations are met. All this is possible thanks to our adaptable and flexible units, which always offer the best products with the highest added value for the company.
3 OPEC "Oil Market Report" January 2022.
Source: American Energy Agency.
Production Consumption
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100
95
90
85
80
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Mb/d Forecast
